APPENDIX B1
News You Can’t Use
From my July 6, 1998, Forbes column.
Reader Neil Bell e-mails that he is “puzzled by your lack of attention to the year 2000 problem.” I write back saying I covered it in my Mar. 13, 1995, column. Reader Bell responded that I ought to look at several of the detailed Web sites showing just how serious this Y2K thing really is.
So I did and have come to the conclusion that Y2K faddists to the contrary, this thing won’t seriously hurt the stock market or cause you any other major inconvenience.
My view on such things is very simple: One should be aware of all the buzz in the media, if for no other reason than to go contrary to it. If any subject has more than one Web site devoted to it, it is either wrong or already fully discounted in the marketplace. The most basic of all market notions is that the market (The Great Humiliator) is a discounter of all known information. It succeeds by making sure that whatever we all know is either wrong or is already priced into securities. Yes, listen to the buzz but never try to make money except by acting against it.
Y2K is heavily covered. Even the SEC has pronounced its fear of Y2K. So ignore it. The Great Humiliator does this stuff effortlessly. It is just like everyone’s massive fear of high P/Es. In markets, it’s what you don’t see or know that gets you because the only thing that moves markets is surprise: There’s not much surprise in anything that’s all over the World Wide Web. And the most likely surprise in a high-P/E stock is from bad news, not good news, which is already in the price. In my 26-year career, now in my 15th year of doing this column, I have never, ever known this rule to let me down: The obvious never moves markets; surprises almost always do.
In 1995 I wrote this: “If you read or hear about some investment idea or significant event more than once in the media, it won’t work. By the time several commentators have thought and written about it, even new news is too old.”
In that spirit I say: Forget Y2K.
1 Forbes, July 6, 1998. Reprinted by permission of Forbes magazine. © Forbes, 2012.